Opinion
B309217
08-24-2023
GOLTHA GREEN, Plaintiff and Appellant, v. JPMORGAN CHASE BANK N.A. et al., Defendants and Respondents.
Freddie Fletcher for Plaintiff and Appellant. Hershorin &Henry, David Hershorin and Sarah Denis for Defendant and Respondent Federal National Mortgage Association (Fannie Mae). Lubin Olson &Niewiadomski, Mia S. Blackler and Laura L. Gildengorin for Defendants and Respondents JPMorgan Chase Bank, N.A. and California Reconveyance Company. Hill, Farrer &Burrill, G. Cresswell Templeton, III and Jeffrey B. Bell for Defendant and Respondent Jesus C. Lopez, Jr. Anderson, McPharlin &Conners, Jesse S. Hernandez and Carleton R. Burch for Defendant and Respondent Ridgeley Drive Apartments.
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County No. BC548724, Mitchell Beckloff, Judge.
Freddie Fletcher for Plaintiff and Appellant.
Hershorin &Henry, David Hershorin and Sarah Denis for Defendant and Respondent Federal National Mortgage Association (Fannie Mae).
Lubin Olson &Niewiadomski, Mia S. Blackler and Laura L. Gildengorin for Defendants and Respondents JPMorgan Chase Bank, N.A. and California Reconveyance Company.
Hill, Farrer &Burrill, G. Cresswell Templeton, III and Jeffrey B. Bell for Defendant and Respondent Jesus C. Lopez, Jr.
Anderson, McPharlin &Conners, Jesse S. Hernandez and Carleton R. Burch for Defendant and Respondent Ridgeley Drive Apartments.
MOOR, J.
In this wrongful foreclosure action, plaintiff and appellant Goltha Green appeals from a judgment following a bench trial in favor of defendants and respondents JPMorgan Chase Bank, N.A. (Bank), California Reconveyance Company (Trustee), Federal National Mortgage Association (Fannie Mae), and foreclosure sale purchasers Ridgeley Drive Apartments, LLC, and Jesus C. Lopez, Jr., individually and as trustee of the San Miguel Irrevocable Trust. On appeal, Green contends that: (1) undisputed evidence established that the Bank prevented Green from making payments on his loans; (2) the trial court's finding that there was no oral extension of the time for payment was not supported by substantial evidence; (3) the trial court's finding that Green was not prejudiced by errors in the notices of default or the reinstatement reports was not supported by substantial evidence; (4) judicial notice of the Trustee's deeds upon sale conclusively established the foreclosure sales were conducted on behalf of an entity that did not have a beneficial interest in the notes or deeds of trust; and (5) the trial court failed to make findings on Green's setoff claims.
We conclude the facts did not conclusively demonstrate that the Bank prevented Green from making payments; rather, substantial evidence supports the trial court's finding that Green was not prevented from making payments on his loans. Green failed to prove he received an oral extension of time for payment or was prejudiced by any errors in the notices of default. The trial court properly refused to take judicial notice of the truth of matters stated in the Trustee's deeds upon sale. The trial court also fully determined Green's setoff claim. Therefore, we affirm.
In accordance with the standard of review, the facts are stated in the light most favorable to the judgment. (Thompson v. Asimos (2016) 6 Cal.App.5th 970, 981.)
Loans and Force-Placed Insurance
In 2008, Green owned four rental properties, referred to herein as Imperial, 54th Street, 2419 Ridgeley, and 2425 Ridgeley. He had six loans secured by deeds of trust on the properties, which were acquired by the Bank. One deed of trust encumbered Imperial, one deed of trust encumbered 54th Street, and each of the Ridgeley properties were encumbered with junior and senior deeds of trust.
Loan payments were due on the first day of each month and became delinquent on the second. If the regular monthly payment was not made by the 16th day of the month, late charges were assessed, and the loan was in default under the terms of the deeds of trust. If a loan is in default, the Bank was entitled to apply payments in a manner at its discretion.
In the event of a default, the full amount secured became due and payable, without notice or demand, and the Bank was authorized to exercise its power of sale. Accepting a payment after the due date did not waive the Bank's right to require prompt payment or to declare a default for failing to pay sums when they were due. The documents for the junior loans contained cross-default provisions providing that a default on the senior loan resulted in a default on the junior loan. California Reconveyance Company was named as the trustee in each deed of trust.
Green was required to maintain insurance on his properties. If he did not have insurance, the loan agreement allowed the Bank to obtain coverage and add the cost of the premium to his debt, a process known as "force-placed insurance." The Bank sends multiple notices reminding the borrower to provide evidence of insurance before the Bank secures force-placed insurance.
The Bank concluded there was no evidence of insurance in connection with the 2425 Ridgeley junior loan for the annual period beginning in October 2008. In December 2008, the Bank notified Green that a policy premium of $19,166 for force-placed insurance had been added to the 2425 Ridgeley junior loan and would be collected over nine months. Green paid the first installment with his January 2009 monthly payment on the junior loan and the last installment with the November 2009 monthly payment. The Bank's notes for the loan show that on December 8, 2009, the Bank submitted a waiver of force-placed insurance on the account for the next policy period because it was a second lien and insurance was being tracked on the first lien. In addition, shortly afterward, the Bank received evidence of insurance on the property from Green's insurance agent.
In March 2010, Green noticed the insurance charges paid in 2009 on the 2425 Ridgeley junior loan and asked the Bank to investigate, although the Bank's notes for 2425 Ridgeley do not reflect this request.
In April 2010, the Bank added $6,782 to the 2419 Ridgeley junior loan for a force-placed insurance policy. Green was charged an additional $753.56 each month for the insurance, beginning with the June 2010 monthly payment. On June 17, 2010, however, the Bank's notes reflect that the Bank disabled insurance lines for the junior loan and noted the force-placed insurance on the junior loan should be cancelled.
On July 12, 2010, Green attempted to make a payment on the 2425 Ridgeley senior loan, but the payment was reversed due to insufficient funds.
On July 14, 2010, the Bank's notes reflect an inquiry was opened to have the insurance department clarify the force-placed insurance charges on the 2419 Ridgeley junior loan with Green.
As of July 16, 2010, five of Green's loans were in default for failure to make the monthly payments, and as a result of the cross-default provisions, all of Green's loans were in default. Prior to July 2010, Green's loans had been delinquent more than 100 times and regularly in default.
Once the loans were in default, Green did not have a right to direct the way that the Bank applied a credit for force-placed insurance; the Bank had discretion to apply the credit in different ways, including providing a refund by check or an offset against the delinquent loan balance. On July 20, 2010, Bank employee Gary Tovar notified Green that he had been incorrectly charged for force-placed insurance in connection with the 2419 Ridgeley junior loan and would receive a refund. Green did not know the total amount owed to him for force-placed insurance, but the Bank's notes reflect that a voicemail message was left that he would receive a refund of the June and July insurances charges within 45 days, which totaled $1,507.12.
Assignment to Special Credits Group
On July 20, 2010, as a result of the ongoing delinquencies, Green's loans were forwarded to the Bank's special credits group. When a loan has a problem, such as a default, the servicing department assigns the loan to the special credits group. The goal of the special credits group is to get the loan reinstated and returned to the regular servicing unit. The special credits officer assigned to the loan contacts the borrower to explain that the loan has been assigned to the special credits group and all future communication should come through that particular special credits officer. All communication is made through one employee so that the borrower knows the amount due and there is no miscommunication about the steps to cure the default.
After a loan has been transferred to the special credits departments, the Bank places a hold code on the loan. The hold code informs anyone looking at the servicing system not to simply process the loan in the normal way. When a loan is delinquent, the first hold code placed on the account is an "N" code, which directs employees at a branch not to accept any payments. It does not mean the Bank will not take any further payments from the borrower, but simply that payments require special handling to make sure they are delivered correctly. An "S" code means the loan has been assigned to the special credits department. Communications should go through the special credits officer assigned to the loan. Other than noting the assignment to a special credits officer, an S code is not functionally different from an N code. After an S or N code is placed on an account, payments made through the normal payment system are rejected. A hold code may have an impact on electronic payments. Customer service representatives have some discretion to ignore a hold code and accept a payment, but they are discouraged from doing so.
On July 20, 2010, the Bank issued a delinquency notice for the 2425 Ridgeley senior loan showing the total amount due was $26,023.88 (for the June and July monthly payments totaling $21,911.44, costs of $25, and late charges of $4,087.44) On July 23, 2010, the Bank issued a delinquency notice for the 54th Street loan showing the total amount due was $16,441.47 (for the July monthly payment of $13,475.44 and late charges of $2,966.03). The Bank also issued a delinquency notice for the Imperial property, which Green cured by making the payment required.
On July 23, 2010, Green went into a branch and provided a cashier's check for $10,955 toward the amount owed on the 2425 Ridgeley senior loan. The branch manager could not process the check because of the instructions on the account, but accepted the check from Green.
The Bank can refuse to accept a partial payment when a loan is in default. However, the Bank sent a letter to Green dated July 26, 2010, explaining that the funds he left with the branch manager were applied to the 2425 Ridgeley senior loan. The Bank stated that acceptance of the partial payment did not cure or waive Green's defaults under the loan, nor did it constitute a modification or extension of the loan or an agreement to forbear. The Bank requested payment of $26,052.39 by August 4, 2010, for the remaining amount due on the delinquency notice plus the monthly payment due on August 1, 2010. Moreover, the Bank stated that the July 20, 2010 delinquency notice continued to be in effect because the amount due under the loan had not been received, and if the amount required to reinstate the loan was not received by August 4, 2010, the Bank could commence foreclosure proceedings.
On July 28, 2010, the Bank issued a delinquency notice for the 2419 Ridgeley senior loan showing the total amount due was $8,162.49 (for the July monthly payment of $6,095.68, costs of $50, and late charges of $2,016.81). The notice stated that if payment was made after August 16, 2010, there were additional charges due of $6,130.50 (for the August monthly payment of $5,906.41 and additional late charges of $224.09), and the total to reinstate the 2419 Ridgeley senior loan as of August 27, 2010, would be $14,292.99. The Bank also issued a delinquency notice for 2425 Ridgeley junior loan, which Green cured.
On July 30, 2010, Green spoke on the telephone with customer service representative Jared Morris. The Bank's notes reflect Green said he filled several vacant units and things were improving. He expected to make his August payments by August 20, 2010, and have all of his loans up to date in September. Green paid the July monthly payment for the 54th Street loan, but not late charges owed. He attempted to pay $8,162.49 on the 2419 Ridgeley senior loan, but the payment was later reversed for insufficient funds.
The name of the customer service representative is spelled multiple ways in the record.
On dates between July 28 and August 2, 2010, Green's loans were assigned to special credits officer Katrin Franz for special handling.
Green did not make the August monthly payment on any loan except the 2419 Ridgeley junior loan, which was paid through an automatic withdrawal from his bank account.
On August 6, 2010, Green attempted to make the July mortgage payment on the 2419 Ridgeley senior loan in a branch office with a cashier's check for $8,162.46. The bank teller refused to take the check because of the instructions on the account and told Green to contact special credits officer Franz.
The amount was three cents less than the amount stated in the July delinquency notice.
The Bank's notes reflect that the Bank received a refund from the insurer on August 9, 2010, for the policy charged to the 2419 Ridgeley junior loan.
Green spoke to Franz on August 10, 2010. Green knew Franz was in Texas, but did not know her business address in Irving, Texas. On August 14, 2010, Green sent his cashier's check in the amount of $8,162.46 for the July mortgage payment on the 2419 Ridgeley senior loan by overnight mail to an address for payments in Fort Worth, Texas, with a note asking Franz to apply the funds to the 2419 Ridgeley senior loan. He asked that the contents be forwarded to the proper department.
On August 16, 2010, the Bank received Green's cashier's check for $8,162.46. Franz directed other Bank employees to return the check for $8,162.46 to Green with instructions to contact Franz for the amount required to reinstate the loan.
On August 18, 2010, before the first check was returned to him, Green sent a second cashier's check in the amount of $6,095.68 for the August mortgage payment on the 2419 Ridgeley senior loan to the same Fort Worth, Texas address. Green included a note to Franz stating that he previously sent a cashier's check for $8,162.46 by overnight mail. He explained that two months earlier, he asked the Bank's insurance department to investigate why he was being charged for force-placed insurance on this loan and others. Green stated that Tovar had found Green was incorrectly charged for force-placed insurance and entitled to a refund. Green asked Franz to assist him to have the proceeds applied directly to the 2419 Ridgeley senior loan.
The post office's tracking records show that the second package with the check for $6,095.68 was delivered to the Fort Worth address on August 19, 2010, but the Bank has no record of receiving the check. The funds were eventually repaid to Green on the basis that the check was lost. Had the Bank received and applied the checks for $8,162.46 and $6,095.68 to the 2419 Ridgeley senior loan, however, Green still would not have paid the full amount of $14,292.99 listed for reinstatement in the July 28, 2010 delinquency notice.
On August 19, 2010, the Bank's notes reflect that Green asked to apply the credit for force-placed insurance on the 2419 Ridgeley junior loan to the 2425 Ridgeley senior loan instead. The Bank employee contacted Franz for approval to apply the credit as Green requested. On August 20, 2010, with Franz's approval, the Bank moved the credit of $1,507.12 for force-placed insurance on the 2419 Ridgeley junior loan and applied it to the 2425 Ridgeley senior loan instead.
By the time Green requested Franz's assistance to apply his credit from force-placed insurance to the 2425 Ridgeley senior loan, even assuming the amount of $19,166 that Green paid on the Ridgeley 2425 junior loan was a credit owed to Green, it would not have cured his default on the 2425 Ridgeley senior loan. As of August 16, 2010, Green owed the July and August monthly payments totaling $21,910, as well as July and August late fees. The amount necessary to cure the default on the 2425 Ridgeley senior loan would have exceeded Green's credit by almost $7,000.
After the cashier's check for $8,162.46 was returned, Green kept it for a while, but eventually cashed it. The Bank never provided a refund or credit for the amount that Green paid for force-placed insurance in 2009 in connection with the 2425 Ridgeley junior loan.
Acceleration of the Loans
As a result of the ongoing payment defaults, on August 30, 2010, the Bank accelerated all of Green's loans except the 2419 Ridgeley junior loan, causing the entire balance of each loan to become immediately due and payable. On the same date, Green called Franz to ask for the amounts due on each loan. She told him the amounts due and requested that all six loans be reinstated at the same time.
On September 1, Green sent two cashier's checks to the Fort Worth, Texas address in the amount of $10,955.72 each, for a total of $21,911.44, to be applied to the 2425 Ridgeley senior loan. The Bank has no record of receiving the checks, and Green later recouped the funds based on an affidavit stating that they were lost.
After Green received the acceleration notices, he called Franz to ask about the acceleration notices and the cashier's checks that he had sent. She told him to speak with the Bank's attorney, Mitchell Ludwig, from that point forward. Green called Ludwig. Green faxed a proposed payment plan to Ludwig, along with copies of the cashier's checks and express mail receipts. Green proposed to make four payments of various amounts in September, eight payments in October, six payments in November, and nine payments in December to have the accounts up to date by December 20, 2010.
On September 10, 2010, Ludwig wrote a letter to Green acknowledging the proposed payment schedule. After reviewing the proposal, the Bank responded that it could not wait until December to initiate the foreclosure process and have a receiver appointed. The Bank was willing to consider a shorter time period of ten days to bring all of the loans current. If that was acceptable to Green, the Bank would wait to record the notice of default and postpone court action. If not, the Bank would begin the foreclosure process, but Ludwig noted that Green was entitled to reinstate the loans in accordance with California law.
Green did not attempt to make any further payments on his loans. Autodraft payments for the 2419 Ridgeley junior loan were terminated by the Bank prior to the September monthly payment. As a result, Green failed to make the September 2010 payment on the 2419 Ridgely junior loan, and based on this default and the ongoing payment defaults on the 2419 Ridgeley senior loan, the Bank accelerated the 2419 Ridgeley junior loan.
Notices of Default
On December 6, 2010, a notice of default and election to sell under the deed of trust was recorded as to each property. Each notice stated, "you may have the legal right to bring your account in good standing by paying all of your past due payments plus permitted costs and expenses within the time permitted by law for reinstatement of your account, which is normally five business days prior to the date set for the sale of your property." Each notice set forth the full accelerated amount of the loans as of the date of the notice and stated that the amount would increase until the account became current. In addition, the notices stated, "Upon your written request, the beneficiary or mortgagee will give you a written itemization of the entire amount you must pay. You may not have to pay the entire unpaid portion of your account, even though full payment was demanded, but you must pay all amounts in default at the time payment is made."
The notices described the deeds of trust and identified Washington Mutual Bank, FA, as the original beneficiary. Each notice identified the breach, and the default, as being that payment had not been made of: the entire principal balance of the promissory note, with interest; late charges; advances, if any, together with interest on the advances; and attorney fees and court costs.
After Franz left the special credits group, Green's loans were assigned to special credits officer Douglas Johnson. On March 1, 2011, Green asked Johnson to provide the amounts necessary to bring his loans current, as well as an accounting from the receiver about funds available. On March 4, 2011, Green again asked Johnson to provide the amounts necessary to reinstate his loans and added that the request was time sensitive because he could lose the assistance of parties that he was working with. On March 16, 2011, Johnson sent reinstatement reports for each of the loans. Johnson stated that the Bank would allow reinstatement based on several conditions, such as that Green must provide a physical address and sign a notarized affidavit that he resided at the address. If the loans were not reinstated by March 31, 2011, the Bank would institute foreclosure proceedings. Green did not tender any funds after receiving the reinstatement reports, even amounts that he agreed were owed.
Foreclosure Proceedings
Initially, the Bank had filed judicial foreclosure complaints and had a receiver appointed for the properties. Ultimately, the Bank instituted nonjudicial foreclosure proceedings. The foreclosure sale was held on June 15, 2011. The Bank sent bid instructions to the Trustee for each property. Each stated that in the event the Bank was the successful bidder at the sales, title to the property should be taken in the name of the Bank's subsidiary, CRP Properties, Inc.
At the sale, the Bank's credit bid was the successful bid as to each property. The Trustee prepared and recorded assignments granting CRP Properties, Inc., the interest under the deeds of trust. The Trustee's deeds upon sale each declared that "[t]he Grantee herein was the foreclosing beneficiary" and the Trustee granted all of its rights, title, and interest in the property to "CRP Properties, Inc., (herein called Grantee)[.]"
CRP eventually sold the properties to third parties. Each deed stated CRP Properties, Inc., was granting the property to the third party. The Bank dismissed the judicial foreclosure complaints.
PROCEDURAL BACKGROUND
Complaint
On June 16, 2014, Green filed a complaint for wrongful foreclosure and related causes of action arising from the foreclosure sales. He filed the operative fifth amended complaint on March 29, 2017. Ultimately, causes of action for wrongful foreclosure, quiet title, and breach of contract were presented to the court in three phases.
The general allegations of the complaint alleged, among many other things, that the Bank became indebted to Green in the amount of $19,166.04, plus late fees, charges for delinquent payments, charges for insufficient funds, and other fees and costs, for a total of $30,567.16.
The cause of action for wrongful foreclosure alleged that Green timely tendered full payment of the 2425 Ridgeley senior loan on July 23, 2010, based on the July 2010 delinquency notice through a cashier's check and setoff for the balance. The Bank refused to apply the setoff without stating a reason or objection. On July 30, 2010, Green timely tendered full payment for the delinquent installments on his other loans, leaving only the regular August monthly payments that had not yet accrued, but the Bank refused the setoff that Green tendered as part of some of his payments without stating a reason or objection, and despite the fact that the Bank's debt to Green exceeded Green's debt to Chase for the amount tendered.
Green alleged that he timely tendered full payment for each loan as required by the terms of the loan's July 2010 delinquency notice, but the Bank wrongfully refused the tender, blocked payments to his loan accounts, and refused to accept further payments by imposing a condition that he pay the amounts due on all of the loans or none of them. The amounts stated in the July 2010 delinquency notices, which the Bank refused, were all deemed paid by setoff as of September 2, 2010, based on mutuality of indebtedness. Not only was Green's obligation to pay legally excused, but the debts were extinguished through setoff of the Bank's debt to Green.
Phase 1 A. Expert Testimony
Phase 1 of the trial began on January 22, 2018. The Bank's accounting expert Alexander Everett testified that even if the Bank had provided credit for the force-placed insurance on the 2425 Ridgeley junior loan and applied the cashier's checks sent by Green, he would have been unable to meet the debt service on his loans. He noted the loans were accelerated on August 30, 2010, and the September monthly loan payments were in default if not paid by September 16, 2010.
On August 30, 2010, the unpaid balances owed on the loans totaled $48,940.24, excluding any late fees. That date, Green's bank accounts were overdrawn by $100.50. After payment of the past due amounts, the balance in Green's bank account would have been negative $49,040.74. Adding back $19,166.04 for the force-placed insurance on 2425 Ridgeley junior loan would bring Green's bank account to negative $29,874.70. Adding back the two cashier's checks that had been issued totaling $14,258.14, he would have had a negative balance of $15,616.56. Even if Green had gotten the checks back immediately and received credit from the force-placed insurance, he would have been unable to pay the balances owed, not to mention any late charges assessed, and the loans would have been accelerated.
On September 16, 2010, Green did not have enough money in his bank account to pay the September monthly loan payments of $35,417.30 and the unpaid loan balances from August. His bank balances on September 16, 2010, totaled $11,324.81. After payment of the September monthly payments, his bank balance would have been negative $24,092.49. After paying the past due amounts from August 2010, his account balance would have been negative $73,032.73. Even adding back the force-placed insurance credit and all four of the cashier's checks that had been issued by that point, Green would have had a negative balance of $17,697.11. Everett did not include late fees in any of his calculations.
In Everett's opinion, Green did not have the financial ability to pay the debt service during the relevant time period. He certainly did not have the amount necessary to pay the full balance of the loans after acceleration. Green commingled rents and payments for his properties in a single bank account without any clear records. As a result of the commingled funds and the lack of records, Everett could not analyze whether Green could have cured any particular loan during the relevant period. A bank receiving money to reinstate a particular loan would not have known whether the money was generated by the property securing the loan or whether it came from another lender's property.
B. Closing Argument
In Green's closing argument, he noted the Bank relied on a provision of the loan documents stating that in the event of default, the Bank may apply payments to the loan obligation in the manner it elected and at its sole discretion. Green argued that the loan documents did not say the Bank had the right to apply the payment to a different loan obligation secured by a different deed of trust. In other words, the Bank could not decide to apply the refund due on the 2419 property to the obligation secured by the 2425 Ridgeley senior deed of trust, because it was a separate security instrument.
He also argued that in addition to the checks that Green mailed, he included a note asking for his credit for force-placed insurance to be applied to the 2425 Ridgeley senior loan. As a result, he argued, Green was not in default on the 2425 Ridgeley senior loan and the Bank improperly accelerated the loan.
Green also argued that in August 2010, the only amount remaining to be paid on the 54th Street loan was late charges of $2,966, which he had the ability to pay through the credit for force-placed insurance.
In his rebuttal argument, Green argued that a debtor is not in default if the creditor owes the borrower the amount of the debt that the borrower owes. With respect to the 2425 Ridgeley senior loan, after his partial payment, Green's balance in July was $15,068.16, which was the only delinquent amount at that point. At that point, the credit for force-placed insurance was greater than the balance owed in July. With respect to the 54th Street loan, the balance due was $2,966. The amounts due on these two loans were less than the credit for force-placed insurance.
C. Trial Court Ruling
At the conclusion of phase 1, the trial court found that Green was in default on each loan for failing to make required monthly payments when the Bank elected to accelerate the loans. The court did not find the testimony of Green or his spouse to be credible.
The trial court found the Bank did not prevent Green from making a payment on any of the loans. There was no evidence that the Bank ever blocked, prevented, or refused a payment from Green on the Imperial loan or the 54th Street loan. On the 2425 Ridgeley senior loan, the Bank accepted and credited a partial payment that did not cure the default, reserving its rights under the loan documents, and Green did not attempt to make further payment. On the 2425 Ridgeley junior loan, after bringing it current at the end of July, Green made no further payments.
On the 2419 Ridgeley senior loan, on August 6, 2010, Green owed $8,162.49 for the July 2010 payment as well as $5,905.41 for the August payment. The branch customer service representative did not accept Green's payment and referred him to Franz, consistent with the Bank's management of delinquent loan accounts. Green spoke with Franz, mailed a payment of $8,162.46, but by the time the payment was received by the Bank, the loan was also in default based on the failure to make the August payment and payment of $14,292.99 was required to cure the default. The Bank returned the payment with instructions to contact Franz to obtain the amount required to reinstate the loan. There was no evidence that Green attempted to bring the 2419 Ridgeley senior loan current after the partial payment was returned. At most, the Bank refused to accept a partial payment that was insufficient to reinstate the loan, and instead requested the full amount necessary to reinstate the loan. Green had not shown that the Bank precluded him from making his required loan payments.
Green claimed that in their July 30, 2010 conversation, customer service representative Morris deferred late fees and gave Green an oral extension of time to make payments. Based on all of the evidence, the trial court was not persuaded that Morris provided an extension of Green's obligations. Even assuming Morris had, the loan documents required modifications to be in writing. The court found that the delinquency notices also did not modify the loan documents.
The trial court expressly considered Green's claim that an offset of $19,166 for force-placed insurance cured his default. The court stated that the Bank incorrectly believed Green failed to obtain insurance on 2425 Ridgeley, so the Bank obtained coverage and charged Green from February 2009 through October 2009, as reflected on the monthly statements for the 2425 Ridgeley junior loan. In March 2010, months after the charges ceased, Green noticed the charges and asked the Bank about it. The total cost of insurance recouped by the Bank was $19,166. Around July 26, 2010, a representative of the Bank told Green that he was entitled to reimbursement for force-placed insurance.
The court found Green's testimony was not credible that he asked the Bank on July 23, 2010, to apply credit for force-placed insurance on the 2425 Ridgeley junior loan to the payment owed on the 2425 Ridgeley senior loan. The Bank's notes did not reflect any such request. Green's August 16, 2010 note to Franz asked for assistance to have force-placed insurance proceeds applied to the 2419 Ridgely senior loan. Green did not state that he had made any prior requests for setoff and could not have believed he already used his credit toward the 2425 Ridgeley senior loan.
The court found Green did not ask Franz to apply an offset for force-placed insurance to the 2425 Ridgeley senior loan until August 19, 2010. Even assuming Green was entitled to an offset, by the time he requested assistance from Franz to obtain the offset, it would not have cured his default on the 2425 Ridgeley senior loan. At that point, Green owed his required July payment of $10,955, the required August payment of $10,955, and the late fees charged for July and August. The amount necessary to cure the default on 2425 Ridgeley senior loan as of August 16, 2010, would have exceeded Green's credit by almost $7,000.
Phase 2
Phase 2 of the trial began on April 29, 2019. Green argued the Bank's failure to state the amount required to reinstate the loans under Civil Code section 2924c in the notices of default prevented Green from reinstating his loans and excused him from tendering the reinstatement amount. In addition, Green argued that his ability to pay the reinstatement amount should be assessed as of the date of the notices of default, when Green could have reinstated at least the 54th Street loan. Green additionally argued that the notices of default failed to allege a default. The Bank argued that Green knew the amount owed on his loans, but lacked the ability to pay it.
The trial court found that the Bank's notices of default did not set forth the amount required to cure the default as required under Civil Code section 2924c, subdivision (b)(1), but instead stated the total accelerated amounts due on the loans, which was far in excess of the amounts necessary to reinstate the loans. Although the notices stated that the borrower should contact the Bank to find out the amount that must be paid to stop the foreclosure, the Bank did not comply with its statutory obligation to inform Green of the amount necessary to reinstate the loan. The trial court also found the Bank's efforts to place conditions on Green's reinstatement rights were unauthorized.
The court noted that "The Bank's election to proceed with notices of default setting forth incorrect and accelerated amounts due under the loans (despite specific statutory requirements otherwise), its repeated failure to respond substantively to [Green's] request for an actual amount due as well as its claim (twice) [that] the Bank was conditioning reinstatement on new loan terms and payment by a specific date demonstrate remarkably poor practice. It does not appear from the evidence the Bank ever provided [Green] with an accurate statement of the amounts necessary to reinstate the loans. Nonetheless, the Bank did not prevent [Green] from reinstating the loans - by his own admission, [Green] gave up trying." (Fns. omitted.)
The court found Green was advised in September 2010 that he had the right under California law to pay the arrearages, rather than the accelerated amounts due. Although the Bank did not provide Green with the amount necessary to reinstate the loans in the notices of default, the trial court found Green did not suffer any prejudice from the Bank's failure. Green made no effort after March 30, 2011, to reinstate his loans; accordingly, the Bank did not refuse to accept any attempted tender.
Even though Green disputed charges included in the reinstatement amounts, Green made no tender of even the undisputed amounts due. The Bank provided reinstatement reports in March 2011 setting forth and segregating the principal amounts due, default interest accrued, late charges, and principal and interest running from April 1, 2011. Green could have paid the undisputed charges, and after payment, forced the Bank to demonstrate its entitlement to foreclose or later brought an action for wrongful foreclosure.
The trial court was not persuaded by the evidence that Green had funds available to reinstate the loans but for the Bank's failure to provide a clear reinstatement amount. Green claimed his brother, father, and a few others, were investors willing to loan him money to reinstate the loans, but they could not assist without knowing amounts. Green had no written loan commitments. On March 15, 2011, Green sent Johnson a copy of two cashier's checks totaling $83,000 made payable to a trust that once held one of the properties. The checks were to demonstrate that he had investors ready to loan him money, but the checks were never made payable to the Bank. Other than the two cashier's checks, Green presented no documentary evidence, such as bank statements, loan applications, or commitment letters, to support his claim that he had access to the cash necessary to reinstate his loans. No witness testified about their willingness or ability to loan money to Green.
The trial court concluded, "Based on the foregoing, assuming the notices of default were defective for their failure to provide the exact amount [Green] needed to pay to reinstate his loans (or something close to it), the court finds [Green] suffered no prejudice from the deficiency. Accordingly, [Green] did not establish the Bank prevented [Green] from exercising his statutory reinstatement rights."
Phase 3
Phase 3 began on February 3, 2020. At Green's request, the trial court took judicial notice of several documents, including the recorded assignments and deeds of trust associated with the properties. Based on the statements in the trustee's deeds upon sale that identify CRP Properties, Inc., as the foreclosing beneficiary, Green argued that the trustee exercised the power of sale on behalf of an entity with no ownership interest in the notes or deeds of trust, and accepted a credit bid from the nonbeneficiary to purchase Green's properties. As a result, Green argued, the deeds were void on their face.
The trial court found that each notice of trustee's sale identified the deed of trust through which the Bank was exercising its power of sale and the Trustee as the duly appointed trustee under the deeds of trust. Each notice of trustee's sale identified the Bank as "the current beneficiary to the Deed of Trust" except the notice for the 2425 Ridgley senior loan. The notice of trustee's sale related to the 2425 Ridgley senior loan omitted the current beneficiary language in a clerical error, but the notice of sale for the junior loan on the property identified the Bank as the current beneficiary and said the sale on the junior loan was to be immediately followed by the foreclosure of the senior loan. The court noted that the Bank's bid instructions to the Trustee directed title be taken in the name of its subsidiary CRP Properties, Inc.
The court found it was undisputed that the Bank was the beneficiary under all of the deeds of trust at the moment that the sales occurred and had the authority to cause the Trustee to exercise the power of sale under the deeds of trust. Green failed to show an illegal, fraudulent, or willfully oppressive sale of real property pursuant to the power of sale in the deeds of trust and could not prevail on the wrongful foreclosure claim. In addition, Green's claim failed because he did not identify any prejudice suffered because of the typographical error in the Trustee's deeds upon sale stating the grantee, CRP Properties, Inc., was the foreclosing beneficiary. He did not demonstrate that anything about the language in the trustee's deed upon sale affected his ability to protect his interest or that his rights were affected in any way; in fact, the language did not exist until after the nonjudicial foreclosure sale occurred and Green had lost his interest in the properties.
On August 28, 2020, the trial court issued a statement of decision consistent with its rulings in each phase of the trial. The court entered judgment in favor of all defendants that day. Green filed a motion for a new trial and a motion to vacate the judgment, both of which the trial court denied. Green filed a timely notice of appeal from the judgment.
DISCUSSION
Standard of Review
"In reviewing a judgment based upon a statement of decision following a bench trial, we review questions of law de novo. [Citation.] We apply a substantial evidence standard of review to the trial court's findings of fact. [Citation.] Under this deferential standard of review, findings of fact are liberally construed to support the judgment and we consider the evidence in the light most favorable to the prevailing party, drawing all reasonable inferences in support of the findings." (Thompson v. Asimos, supra, 6 Cal.App.5th at p. 981.)
"A single witness's testimony may constitute substantial evidence to support a finding. [Citation.] It is not our role as a reviewing court to reweigh the evidence or to assess witness credibility. [Citation.] 'A judgment or order of a lower court is presumed to be correct on appeal, and all intendments and presumptions are indulged in favor of its correctness.' [Citation.] Specifically, '[u]nder the doctrine of implied findings, the reviewing court must infer, following a bench trial, that the trial court impliedly made every factual finding necessary to support its decision.'" (Thompson v. Asimos, supra, 6 Cal.App.5th at p. 981.)
"When a proper request for a statement of decision has been made, the scope of appellate review may be affected. [Citation.] . . . [I]f the statement of decision does not resolve a controverted issue or is ambiguous, and the omission or ambiguity was brought to the attention of the trial court, 'it shall not be inferred on appeal . . . that the trial court decided in favor of the prevailing party as to those facts or on that issue.' [Citation.]" (Thompson v. Asimos, supra, 6 Cal.App.5th at p. 981.) In this appeal, however, Green has not raised any issue that was both the subject of an objection in the trial court and requires application of the doctrine of implied findings on appeal.
Acceptance of Payments
Green contends undisputed evidence established that the Bank prevented him from making payments on his loans. We disagree.
Green incorrectly asserts that our standard of review of the trial court's determination as to whether Green was prevented from making payments is de novo, because he claims the facts on this issue are undisputed. As the discussion that follows illustrates, the issue presented involves a factual dispute that required the trial court to consider and resolve conflicting testimony.
The fact that the Bank placed certain hold codes on Green's accounts and required payments to be coordinated through a special credit officer did not preclude Green from making payments on his loans. Rather, the placement of hold codes changed the method of payment, in order to prevent partial payments that were inadequate to reinstate the loans.
Green reasons that so long as the special credits officer did not determine the amount that Green owed and approve a payment in that amount, the accounts remained frozen and payment was prevented. There was no evidence, however, that Franz, the assigned special credit officer, did not know the amounts owed or refused to approve a payment of the amounts necessary to reinstate one or more loans. The trial court found Green's testimony that Franz required reinstatement of all six loans at the same time was not credible. In fact, the evidence showed that when Green requested the amounts owed, Franz promptly provided him with the information. The Bank was not required to accept partial payments, and there is no evidence that Green tendered a payment of the full amount due on any loan. The trial court's finding that Green was not prevented from making payments on his accounts is supported by substantial evidence, and we do not reweigh the evidence on appeal.
Green's wife also testified about discussions with Franz, but the trial court found Green's wife's testimony was not credible.
Green states that the loan agreements prohibited the Bank from placing hold codes on his defaulted accounts. We need not address this assertion made without any legal or factual analysis, but we note that no provision in the relevant agreements restricted the process for payments.
No Evidence of Extension
At trial, Green claimed, based on his own testimony, that customer service representative Morris agreed to defer late fees and gave Green an oral extension of the time for payment on all six loans. The trial court found that Green failed to prove Morris had granted an extension.
On appeal, Green contends the court's finding is not supported by substantial evidence, but Green's analysis is incorrect. Green had the burden to prove the Bank granted an extension of the time for payment, and the trial court found Green's evidence lacking. Specifically, the trial court found Green's testimony was not credible. Other than Green's testimony, there was no evidence of an oral extension, and the trial court found the totality of the evidence made Green's testimony implausible. The Bank's contemporaneous service records of the telephone call did not assist Green: none of the Bank's internal records reflected an oral modification or extension. In subsequent communications with Franz, after the conversation with Morris, there was no evidence Green told Franz that he had been given an extension or modification. Moreover, at the time of the conversation with Morris, Green's loans had been transferred to the special credits group and assigned to Franz to make decisions about the accounts. Green has not shown on appeal that the trial court erred by finding Green never received an oral extension of time to make payments.
Reinstatement
The Bank's notices of default to Green did not set forth the amount required to cure the default, but instead stated the total amounts due on the accelerated loans, which was far greater than the amounts necessary to reinstate the loans. However, the trial court found that Green failed to show he was prejudiced by any error, because he failed to show that he had the ability to pay the amounts required to reinstate the loans had the notices provided the correct amounts. On appeal, Green's sole contention that he was prejudiced is based on calculations that rely on the errors in the notices of default. Green's analysis is incorrect.
A. Statutory Scheme
Nonjudicial foreclosure sales pursuant to the power of sale in a deed of trust are governed by Civil Code section 2924 through 2924k. (Gomes v. Countrywide Home Loans, Inc. (2011) 192 Cal.App.4th 1149, 1154.) Upon a borrower's default, the trustee initiates the foreclosure process by recording a notice of default and election to sell by the trustee. (Civ. Code, § 2924, subd. (a)(1).) The notice of default must include a statement setting forth the nature of each breach known to the beneficiary. (Civ. Code, § 2924, subd. (a)(1)(C).) The requirement to set forth the nature of the default is strictly followed; a person relying on the notice of default cannot raise any ground for default other than that stated in the notice. (System Inv. Corp. v. Union Bank (1971) 21 Cal.App.3d 137, 153 (System).) After recording the notice of default, the trustee must wait three months before proceeding with the sale. (Civ. Code, § 2924.)
The borrower may prevent foreclosure by curing the default. (Knapp v. Doherty (2004) 123 Cal.App.4th 76, 86-87 (Knapp).) One of the primary purposes of the notice of default is to advise the borrower of the amount required to cure the default. (Id. at p. 99; System, supra, 21 Cal.App.3d at p. 153)
When all or a portion of the principal secured by a deed of trust is due as a result of a default on the payment of interest or principal, the borrower may reinstate the loan by tendering "the entire amount due, at the time payment is tendered, with respect to (A) all amounts of principal, interest, taxes, assessments, insurance premiums, or advances actually known by the beneficiary to be, and that are, in default and shown in the notice of default, under the terms of the deed of trust or mortgage and the obligation secured thereby, (B) all amounts in default on recurring obligations not shown in the notice of default, and (C) all reasonable costs and expenses, subject to subdivision (c), that are actually incurred in enforcing the terms of the obligation, deed of trust, or mortgage, and trustee's or attorney's fees, subject to subdivision (d), other than the portion of principal as would not then be due had no default occurred, and thereby cure the default theretofore existing, and thereupon, all proceedings theretofore had or instituted shall be dismissed or discontinued and the obligation and deed of trust or mortgage shall be reinstated and shall be and remain in force and effect, the same as if the acceleration had not occurred." (Civ. Code, § 2924c, subd. (a)(1).)
"Recurring obligation" in this context means "all amounts of principal and interest on the loan, or rents, subject to the deed of trust or mortgage in default due after the notice of default is recorded[.]" (Civ. Code, § 2924c, subd. (a)(1).)
The notice must set forth the amount of past due payments, plus permitted costs and expenses, that are due as of a particular date to bring the account into good standing again. (Civ. Code, § 2924c, subd. (b)(1).) The borrower may make the back payments to reinstate the loan up until five business days prior to the date of the sale. (§ 2924c, subds. (a)(1), (e).)
Wrongful foreclosure is a common law tort claim. "The elements of a wrongful foreclosure cause of action are:' "(1) [T]he trustee or mortgagee caused an illegal, fraudulent, or willfully oppressive sale of real property pursuant to a power of sale in a mortgage or deed of trust; (2) the party attacking the sale . . . was prejudiced or harmed; and (3) . . . the trustor or mortgagor tendered the amount of the secured indebtedness or was excused from tendering." '" (Sciarratta v. U.S. Bank National Assn. (2016) 247 Cal.App.4th 552, 561-562.)
"The first element-wrongfulness-can be satisfied by a variety of procedural defects, such as noncompliance with the requirements for notice or the trustee's lack of authority to foreclose. [Citation.] The second element-prejudice-is met where an irregularity in the proceeding adversely affects the trustors' ability to protect their interest in the property. 'Prejudice,' however, 'is not presumed from "mere irregularities" in the process.' [Citation.] The third element-tender-requires the trustor to make 'an offer to pay the full amount of the debt for which the property was security.' [Citation.] 'Because the action is in equity, a defaulted borrower who seeks to set aside a trustee's sale is required to do equity before the court will exercise its equitable powers.'" (Ram v. OneWest Bank, FSB (2015) 234 Cal.App.4th 1, 11.) In order to challenge a foreclosure sale based on the right to reinstate the loan, plaintiffs must show they met their statutory obligation by timely tendering the amount required by Civil Code section 2924c. (Turner v. Seterus, Inc. (2018) 27 Cal.App.5th 516, 530.)
"A nonjudicial foreclosure sale is presumed to have been conducted regularly and fairly; one attacking the sale must overcome this common law presumption" 'by pleading and proving an improper procedure and the resulting prejudice.' (4 Miller &Starr, Cal. Real Estate (3d ed. 2000) § 10:211, p. 679.)" (Knapp, supra, 123 Cal.App.4th at p. 86, fn. 4.)
B. Prejudice
Green erroneously relies on the information in the notices of default to calculate prejudice. The notices stated that he breached an obligation to pay the entire principal balance of the loans. Because he was not required to pay the entire principal balance to reinstate the loans under Civil Code section 2924c, Green concludes that no amount of principal or interest in default was shown in the notice of default, or included in the reinstatement amount. From this, he reasons that late charges were the only amounts in default shown in the notices, which he could have satisfied through credit from the force-placed insurance or funds in his bank account. Green's analysis, however, is incorrect.
To show that he was prejudiced by errors in the notices of default, Green needed to show he had the ability to reinstate the loans had the notices provided correct information. The incorrect information in the Bank's notices was irrelevant for the purpose of assessing whether Green was prejudiced by the errors. Green did not show that he would have had the funds available to reinstate the loans based on correct information, if the notices of default had correctly identified each payment of principal and interest in default and provided the total reimbursement amount as of the date of the notices, without including the accelerated portion of the principal, but including unpaid monthly payments of principal and interest for October and November, as well as interest, late fees, and associated attorney fees and costs. The court found Green's testimony about his bank account balances and willing investors was not credible. There was no other evidence that Green had sufficient funds available to reinstate the loans, even with credit for force-placed insurance and rents collected by the receiver, if the Bank had provided the correct reinstatement amount in the notices of default.
Because the issue of prejudice was not based on the notices that Green actually received, but instead concerned information that he should have received, Green's analysis on appeal is incorrect. Green did not tender any amount after receiving the notices of default, even the undisputed amounts in default. And Green has not shown that he was prejudiced by any errors in the Bank's notices of default, because he failed to show that he could have paid the reinstatement amounts for the loans had the notices contained correct information.
Foreclosing Beneficiary
In Green's opening brief, he contends the trial court should have taken judicial notice of the truth of statements in the trustee's deeds that CRP Properties, Inc., was the foreclosing beneficiary. As a result, he concludes, the foreclosing beneficiary was an entity without a beneficial interest in the notes or the deeds of trust and the trustee's deeds were void. Green's analysis is simply incorrect.
Judicial notice is the court's acceptance of a relevant matter of law or face without requiring additional proof of the matter. (Herrera v. Deutsche Bank National Trust Co. (2011) 196 Cal.App.4th 1366, 1374 (Herrera).) "Judicial notice may not be taken of any matter unless authorized or required by law." (Evid. Code, § 450.) Matters subject to judicial notice are listed in Evidence Code sections 451 and 452. For example, Evidence Code section 451, subdivision (f), allows the court to take judicial notice of "[f]acts and propositions of generalized knowledge that are so universally known that they cannot reasonably be the subject of dispute." Evidence Code section 452, subdivision (h), similarly allows judicial notice of "Facts and propositions that are not reasonably subject to dispute and are capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy."
A court may take judicial notice of a matter that is reasonably beyond dispute, including recorded deeds. (Poseidon Development, Inc. v. Woodland Lane Estates, LLC (2007) 152 Cal.App.4th 1106, 1117 (Poseidon).) "However, the fact a court may take judicial notice of a recorded deed, or similar document, does not mean it may take judicial notice of factual matters stated therein." (Ibid.)" 'Taking judicial notice of a document is not the same as accepting the truth of its contents or accepting a particular interpretation of its meaning.' [Citation.] While courts take judicial notice of public records, they do not take notice of the truth of matters stated therein. [Citation.] 'When judicial notice is taken of a document, . . . the truthfulness and proper interpretation of the document are disputable.' [Citation.]" (Herrera, supra, 196 Cal.App.4th at p. 1375.)
In this case, the trial court took judicial notice of the trustee's deeds upon sale, but the court did not take judicial notice of the truth of the statement that CRP Properties, Inc., was the foreclosing beneficiary because the statement was hearsay and reasonably subject to dispute. (See Poseidon, supra, 152 Cal.App.4th at p. 1117.) Taking judicial notice of the recorded documents did not conclusively establish CRP Properties, Inc., was the foreclosing beneficiary. The trial court's finding that the Bank was the foreclosing beneficiary and that the statement in the trustee's deeds was a typo was supported by substantial evidence, including the Bank's bid instructions to the Trustee. In addition, the trial court's finding that Green did not show prejudice from defects in the trustee's deeds is supported by substantial evidence, which Green does not challenge on appeal.
Setoff
All of Green's arguments at trial on the issue of setoff concerned whether his loans were in default when the Bank accelerated them. Green admits the trial court resolved his claim that he was not in default on the 2425 Ridgeley senior loan because he requested a setoff for force-placed insurance on the 2425 Ridgeley junior loan. Green contends, however, that the trial court failed to make findings on the issue of setoff in connection with his other loans. This is incorrect.
Any credit for force-placed insurance charged to the 2425 Ridgeley junior loan related to the loan obligation secured by the junior deed of trust, as Green pointed out in his closing argument in phase 1. Had the Bank provided Green with a credit for force-placed insurance toward his debt on the 2425 Ridgeley junior loan, the junior loan would have still been in default in August 2010 as a result of the default on the senior loan and the cross-default provision.
The trial court expressly found Green's testimony about requests to apply the credit for force-placed insurance to other accounts was not credible. The trial court determined the first time that Green asked the Bank to apply credit for force-placed insurance to a different loan was on August 19, 2010. Although Green requested in a note that the credit be applied to his 2419 Ridgeley senior loan, he subsequently asked for the credit to be applied to the 2425 Ridgeley senior loan. As the trial court explained, even had the Bank applied the credit as Green requested, the amount would not have been sufficient to cure his default on the 2425 Ridgeley senior loan. Implicit in the trial court's ruling is the finding that Green did not request setoff with respect to any other loan.
There was no evidence that Green requested the Bank apply the credit to any other account. The Bank's expert testimony showed that after Green was in default, the amount collected for force-placed insurance and the rents collected by the receiver were not sufficient to bring the loans current.
Green also contends the trial court should have applied the credit for force-placed insurance to one or more of his other loans based on equitable principles, even in the absence of a request to the Bank, and based on this, found Green was not in default when the loans were accelerated. We disagree. Green's claims were wrongful foreclosure, quiet title, and breach of contract. The trial court could not simply pick a loan to which credit could have been applied and conclude the Bank's conduct was wrongful based on the setoff assigned at trial. We conclude the trial court addressed all of the setoff claims that were presented.
DISPOSITION
The judgment is affirmed. Respondents JPMorgan Chase Bank, N.A., California Reconveyance Company, Federal National Mortgage Association, Ridgeley Drive Apartments, LLC, and Jesus C. Lopez, Jr., individually and as trustee of the San Miguel Irrevocable Trust are awarded their costs on appeal.
We concur: BAKER, Acting P. J. EDMON, J. [*]
[*] Presiding Justice of the Court of Appeal, Second Appellate District, Division Three, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.